SERIES – The Net-Zero Transition in the Wake of the War in Ukraine: A Detour, a Derailment, or a Different Path? PART 7

In this series, we attempt to offer a more granular view of what might be in store. We examine the possible effects of the war and its ramifications on the key requirements for a more orderly net-zero transition. We explore the war’s potential effect on key sectors and how shifts in energy and finance markets could play out in the aggregate, both globally and within major regional blocs. Finally, we suggest steps that stakeholders could take as they navigate this turbulent period while continuing to drive toward as orderly a transition as possible. 

To get a clearer idea, visit PART 6 of the series, SERIES – The Net-Zero Transition in the Wake of the War in Ukraine: A Detour, a Derailment, or a Different Path? PART 6 – Earth5R.

Navigating the Moment, Driving toward Transition

Governments can’t accomplish the net-zero transition alone. Private-sector leaders have an opportunity to assume more prominent roles in advancing this critical goal. Success, however, requires visionary and forward-looking leadership at individual and institutional levels. In that connection, companies could consider three actions:

  • Strengthen the risk identification and response muscle. One consequence of the war is a clear increase in global volatility. Now more than ever, it is important to develop a robust capability for managing under uncertainty. A key requirement is to be able to identify and respond in real-time to rapidly evolving circumstances, whether they be related to supply chain function or acceleration of transition risks. The need is certainly not new, but its intensity and the magnitude of the effort required even for the most mature corporations are.
  • Accelerate decarbonization of core operations. Companies would benefit from focusing on levers most directly under their control (such as their production process) or those that provide a strategic advantage by hedging against energy price volatility or future transition risk. This would be particularly true for commodity firms experiencing cash windfalls with high prices. This also means building a strong green procurement muscle with respect to both raw materials and components, reflecting new risks and realities. Industry associations and public-private collaboration would likely also be required to address supply constraints.
  • Support multinational cooperation. International sustainability agreements, commitments, standards, and practices can also be championed and driven by industry associations and ecosystems. Corporations could and should endeavor to increase the momentum through their commitments and actions at this juncture. This means taking a leadership role at the company level, at the industry level, and within ecosystems as users can help influence providers and their practices. This leadership could indeed prove a critical factor in determining the impact of the war on the prospects of the net-zero transition.

To read the entire series, please stay tuned to https://earth5r.org/.

Source: McKinsey

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